Myth: Market value will always be similar to the assessed value of the property.
Reality: While most states uphold the concept that assessed value is equal to estimated market value, this commonly is not the case.
Interior remodeling that the assessor is unaware of and a lack of reassessment on nearby properties are prime examples of why the price can vary.
Myth: The opinion of value of a property will be different depending upon if the appraisal is produced for the buyer or the seller.
Reality: The cost of the home does not affect the payment of the appraiser; as a result, the appraiser has no personal interest in the opinion of value of the house. What this means is he will provide services with impartiality and independence regardless of for whom the appraisal is created.
Myth: Any time market value is established, it should be the same as the replacement cost of the home.
Reality: Market value is based on what a willing buyer would likely pay a willing seller for a certain property, with neither being under duress to buy or sell.
The dollar amount necessary to rebuild a property is what forms the replacement cost.
Myth: There are specific methods that real estate appraisers use to determine the opinion of value of a property, such as the price per square foot.
Reality: Appraisers make a detailed analysis of all factors in consideration to the cost of a property, including its location, condition, size, proximity to facilities and recent worth of comparable properties.
Myth: In a powerful economy - when the sales prices of homes in a given neighborhood are found to be appreciating by a particular percentage - the prices of individual properties in the vicinity can be expected to rise by that same percentage.
Reality: All increase of value is on a one-on-one basis, determined by information on relevant considerations and the data of comparable homes.
This is true in good economic times as well as poor.
Myth: You can usually find what a property is worth simply by looking at the outside.
Reality: There are a multitude of different variables that determine the value of a home; these factors include area, condition, improvements, amenities, and market trends.
Obviously, none of these variables can be derived just by inspecting the property from the exterior.
Myth: Since you're the one coughing up the cash for the appraisal report when applying for your loan to purchase or refinance real estate, you own the ordered appraisal report.
Reality: The document is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the document.
Home buyers must be provided with a version of the appraisal report upon written request because of the Equal Credit Opportunity Act.
Myth: It doesn't mean anything to consumers what's in the appraisal report so long as it satisfies the needs of their lending agency.
Reality: It is a very good idea for consumers to go through a copy of their appraisal so that they can double-check the accuracy of the document, in case they need to question its veracity. Remember, this is probably the most expensive and important investment a consumer will ever make.
An appraisal report can double as a record for the future, containing a great deal of data - including, but not limited to the legal and physical description of the property, square footage measurements, list of comparable properties in the neighborhood, neighborhood description and a narrative of current real-estate activity and/or market trends in the vicinity.
Myth: Appraisers are hired only to estimate house values in house sales involving mortgage-lending transactions.
Reality: Hiring an appraiser can fulfill a variety of requirements depending on the designations and certifications of the appraiser involved; appraisers can perform a great deal of different services, including benefit/cost analysis, tax assessment, legal dispute resolution, and even estate planning.
Myth: A home inspection serves the same purpose as an appraisal.
Reality: Appraisal reports are nothing like a home inspection.
The purpose of an appraisal is to form an opinion of fair market value during the appraisal process and the completion of the appraisal report.
House inspectors will write a report that will show the condition of the property and its major components and possible damage.
